• European bourses are subdued, Euro Stoxx 50 -1.0%, as sentiment deteriorated after a mixed/negative APAC session with US futures hindered but faring relatively better
• DXY was initially pressured losing 91.00 at worst to the benefit of peers across the board though JPY has retraced the initial upside and a move below 108.00 as the USD recuperates
• Chinese President Xi cautioned against nations meddling in other nations internal affairs
• Looking ahead, highlights include ECB's de Cos, earnings from Netflix, Phillip Morris, P&G and Lockheed Martin

CORONAVIRUS UPDATE

US CDC reports COVID-19 total cases rose by 39,442 to 31.48mln and total deaths rose by 312 to 564.3k. (Newswires)

Japan is reportedly seeking blood clot data to assess the AstraZeneca (AZN LN) COVID-19 vaccine, while it was separately reported that Philippines approved EUA for the Johnson & Johnson (JNJ) COVID-19 vaccine and a vaccine developed by India's Bharat Biotech. (Newswires)

ASIA

Asian equity markets traded mixed with risk appetite dampened following the losses on Wall Street where most majors retreated from their recent record highs with the declines led by tech and growth amid a rise in yields and bond selling. ASX 200 (-0.7%) was subdued with nearly all sectors in the red following the headwinds from US peers and as participants digested quarterly updates including Rio Tinto which posted lower iron ore production although its shipments increased Y/Y. Nikkei 225 (-2.0%) underperformed as the recent detrimental currency flows reverberated across Japanese stocks in which exporters took the brunt after USD/JPY briefly gave up the 108.00 handle. Hang Seng (+0.1%) and Shanghai Comp. (-0.1%) were indecisive after a lack of surprises from the PBoC which maintained the status quo on rates for a 12th consecutive month as expected with the 1-year and 5-year Loan Prime Rates kept at 3.85% and 4.65%, respectively. Focus was also on Chinese President Xi’s keynote speech at the Boao Forum where he stated that China has continued deepening reform and opening up, as well as called for countries to join hands in dealing with the pandemic but also reiterated the view for countries to not meddle in the internal affairs of others. Finally, 10yr JGBs were lacklustre after the recent weakness in USTs and slightly lower demand at the 20yr JGB auction, while 10yr yields in Australia and New Zealand were higher by around 4-5bps as they tracked the upside in global counterparts.

PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.20% for a net neutral daily position. (Newswires) PBoC set USD/CNY mid-point at 6.5103 vs exp. 6.5080 (prev. 6.5233)

Chinese President Xi stated that China has continued deepening reform and opening up, as well as called for countries to join hands in coping with the pandemic. President Xi added that a multilateral trading structure with WTO at the heart must be maintained and suggested that building barriers and pushing for decoupling will harm others without benefits, while he added that they must reject a cold war and zero-sum mentality. Furthermore, he said China will not participate in an arms race nor seek hegemony but stated that rules set by a country or some countries cannot be imposed on others and that meddling in others' internal affairs will not get anyone support. (Newswires)

US House passed House Resolution 130 which condemns the continued violation of rights and freedoms of the people of Hong Kong by the People's Republic of China and the Government of the Hong Kong Special Administrative Region, while the House Foreign Affairs Committee stated that we must stand with Hong Kong as they fight for the rights and freedoms promised to them under Hong Kong and international law. (Twitter)

China reportedly conducted an aerial bombing drill following recent US-Japan statements on Taiwan, while other reports noted that the Chinese military was seen to be linked to multiple cyber-attacks in Japan. (SCMP/NHK)

Chinese Industry Ministry says China will actively take measures to stabilise raw material prices; the current round of commodity prices rise will impact manufacturing, but is overall controllable. (Newswires)

• PBoC 1-Year Loan Prime Rate (Apr) 3.85% vs. Exp. 3.85% (Prev. 3.85%)
• PBoC 5-Year Loan Prime Rate (Apr) 4.65% vs. Exp. 4.65% (Prev. 4.65%)

US

White House said the meeting on the infrastructure bill was productive in which President Biden and Transportation Secretary Buttigieg shared their vision in the American Jobs Plan to create millions of good jobs, while Members of Congress engaged in productive exchanges of ideas including parts of the plan and how to fund it, while President Biden asked for their feedback and follow up on proposals, as well as underscored that inaction was not an option. Furthermore, other reports noted that President Biden and the bipartisan group of lawmakers discussed alternative ways to pay for the infrastructure bill including a smaller increase to corporate taxes. (White House/WSJ)

White House was reportedly homing in on a ‘families plan’ spending proposal which will be focused on childcare, pre-K and paid leave, according to The Washington Post. (Washington Post)

UK/EU

German CSU Leader Soeder is accepting the CDU Leadership decision for CDU's Laschet to be Chancellor candidate for the Conservative Union; for reference, Germany's CDU party executive committee supported Laschet as Chancellor candidate for the Federal Election in which Laschet was reported to have won the vote in the CDU party leadership committee by votes of 31 to 9. (Bild/Newswires/Twitter)

UK PM Johnson will, prior to Thursday’s US climate summit, unveil a pledge to reduce emissions by 78% by 2035 vs 1990 levels from the prior goal of 68% by 2030, according to sources. (FT)

UK ILO Unemployment Rate (Feb) 4.9% vs. Exp. 5.1% (Prev. 5.0%); Employment Change (Feb) -73k vs. Exp. -150k (Prev. -147k)

• Average Week Earnings 3M YY (Feb) 4.5% vs. Exp. 4.8% (Prev. 4.8%); (Ex-Bonus) (Feb) 4.4% vs. Exp. 4.2% (Prev. 4.2%)

GEOPOLITICAL

US State Department said the US expresses deep concerns regarding Russia's plans to block foreign naval ships and state vessels in parts of the Black Sea, while it called for Russia to stop harassment of vessels and reverse the build-up of troops at the Ukraine border. In related news, experts reportedly fear that Russia will seize Ukraine's water supply facilities amid a build-up of warships near Ukraine, as well as 150k troops on the border and in Crimea. On this, over 20 Russian warships participated in military exercises in the Black Sea, according to Interfax. (Newswires/Mirror)

Iranian government spokesman says Iran is not ready to offer new privileges to Washington in negotiations, via Al Jazeera; adding, discussions are on the right track in Vienna. (Twitter)

Saudi Arabia has intercepted and destroyed a drone fired by militias towards Khamis Mushit, Sky News Arabia. Additionally, Yemen's Houthis say they attacked the Abha airport in Saudi Arabia, no confirmation from the Saudi side. (Newswires/Twitter)

EQUITIES

Major bourses in Europe saw another lacklustre cash open before a downside bias solidified (Euro Stoxx 50 -1.1%) within the first hour of trade, as sentiment sullied following a mixed APAC handover and amid a lack of fresh catalysts. US equity futures, meanwhile, have extended losses with the RTY underperforming vs peers with no particular trigger for the move lower. Back to Europe, sectors are primarily in the red with shallower losses seen for the Energy and Materials sectors on the back of firmer price action for oil and copper prices. The downside meanwhile sees Personal and Household Goods as the laggard amid disappointing metrics from AB Foods (-2.0%) coupled with hefty losses in tobacco names Imperial Brands (-6.2%) and British American Tobacco (-6.7%) following reports that the US is seeking to lower the nicotine level in cigarettes sold in the US. Travel & Leisure also resides towards the foot of the Stoxx 600 amid the rising COVID cases across some significant economies, whilst Air France-KLM (-3.8%) adds to the glum tone in the sector after a capital increase and as the French government raised its stake in the Co. to tighten its control. The IT sector has failed to gain upside impetus from IBM's (+3% pre-mkt) numbers. In terms of individual movers, BMW (+0.7%) trades firmer after its prelim Q1 figures exceeded market expectations, with growth reported in all significant regions and in particular China. ASM (-10.8%) plumbed the depths amid reports from German press that the Co. is "massively" losing Apple business.

High Court of Justice has sanctioned scheme pursuant to which William Hill's (WMH LN) acquisition by Caesars (CZR) is being implemented. (Newswires)

FX

AUD/NZD - The Antipodean Dollars are taking full advantage of their US counterpart’s ongoing demise, with Aud/Usd and Nzd/Usd both extending rebounds to top round numbers at 0.7800 and 0.7200 respectively. The Aussie has not really been hampered by RBA minutes reaffirming dovish policy guidance overnight given some external impetus from a firmer PBoC Cny fixing, but has lost a bit of momentum in Aud/Nzd cross terms from 1.0820+ towards and through 1.0800 as the Kiwi eyes NZ Q1 CPI tonight for some independent direction. Moreover, Aud/Usd could still be drawn to hefty expiry options sitting below 0.7800 between 0.7795-65 in 1.2 bn for the NY cut.

CAD/EUR/DXY - 1.2500 is still proving to be a sticking point for the Loonie vs its US peer, but Usd/Cad has pulled back from circa 1.2535 against the backdrop of firmer crude prices and the Canadian budget that was mixed in terms of 2020/21 and 2021/22 fy deficit forecasts vs prior projections, though pretty neutral on balance, awaiting CPI and the BoC on Wednesday. Conversely, the Euro has breached 1.2050 that held on Monday and key technical resistance in the form of the 100 DMA that comes in at 1.2058 today on the way up to 1.2080 before stalling, as the Greenback tries to regroup or contain further losses to keep the index within sight of 91.000 between 91.101-90.856 parameters.

GBP/CHF - Both narrowly mixed vs the Buck having probed more psychological levels, but not sustaining sufficient thrust or garnering enough follow-through buying to clear 1.4000 and 0.9150 convincingly. However, Cable could get another fillip from UK inflation data tomorrow following somewhat mixed labour and earnings given the consensus for a rise in headline CPI.

JPY - Almost all change for the Yen that seemed set to overcome 108.00 against the Dollar after scaling the 50 DMA, but Usd/Jpy has bounced firmly to 108.50+ alongside Jpy crosses, such as Eur/Jpy beyond 130.50 and almost reaching 131.00 in what appears to be a technical correction rather than something fundamental, aside from a resumption of US Treasury bear-steepening.

EM - The Yuan is consolidating around 6.5000 in wake of Chinese President Xi’s keynote speech at the Boao Forum flagging deeper reform and further efforts to open up, subsequently echoed by the PBoC Governor in context of the financial sector and expanding the scope for foreign financial institutions to conduct business. Meanwhile, the Rouble has recovered some composure, but mainly on the rebound in Brent to probe Usd 68/brl than any real improvement in Russian diplomatic relations or strains with Ukraine, but Rand and Lira are underperforming on a retreat in Gold and the aforementioned rise in oil.

RBA April meeting minutes reiterated that the board remains committed to doing what it reasonably can to support the Australian economy and would maintain highly supportive conditions until goals were achieved, while it does not expect inflation and employment goals to be reached until 2024 at the earliest. The minutes stated the Board will maintain the Cash Rate at 0.10% for as long as necessary and will not raise the Cash Rate until inflation is sustainably within 2%-3% target. Furthermore, the Board is prepared to conduct further bond purchases beyond the AUD 200bln already announced if it would assist in achieving goals and would consider extending low-cost funding facility for banks if there were a deterioration in funding and credit conditions, although there are currently no signs of that and the central bank also stated that preliminary data suggests March quarter GDP was likely to have recovered further to around pre-pandemic levels earlier than expected.

FIXED

Core debt futures have regained a degree of composure, and extended declines in equities may be a factor even though there is no suggestion of a real safe-haven bid in the true manner or evidence of asset-switching from stocks into bonds. However, Gilts may also be gleaning some encouragement from a decent DMO auction in contrast to a rather tepid German Schatz sale in terms of cover if not all metrics, as they trade 5 ticks over par at 128.60 having been 26 ticks adrift and Bunds top out at 170.50 vs 170.09 at worst (+2 ticks vs -39 ticks). Meanwhile, US Treasuries are also recovering some poise with only the long end of the curve still lagging ahead of 20 year supply on Wednesday.

COMMODITIES

WTI and Brent front-month futures are on the rise amid supply disruptions in Libya, whereby the NOC declared a force majeure on crude exports from its Hariga port, whilst Agoco was forced to reduce output amid a lack of funding. These developments would see Libya's output drop below 1mln BPD for the first time since October vs the 1.3mln BPD production Libyan press reported in early April. This, alongside the Dollar softness, have taken WTI back above USD 64/bbl (vs low 63.38/bbl) and Brent to around USD 68/bbl (vs low 67/bbl). Elsewhere, reports suggest that next week would only see a JMMC meeting with no OPEC+ confab to follow. This indicates that the policy agreed upon last month will not be tweaked as the JMMC does not carry out policy decisions but instead offers recommendations. Energy journalists have noted that the Islamic period of Ramadan could be a reason not to hold two meetings in a short time frame. Turning to metals, spot gold and silver have remained around recent ranges and have been mainly moving in tandem with the Buck in early European hours amidst a distinct lack of catalysts - with spot gold hovering around in a tight range around USD 1,770/oz and spot silver visiting levels on either side of USD 26/oz. Over to base metals, LME copper continues to climb to near 10-year highs as a function of the Dollar, whilst overnight Dalian iron ore futures were bolstered amid improved Chinese steel margins and lower output from the mining giant Rio Tinto. On the recent commodity rise, Chinese Industry Ministry said China will actively take measures to stabilise raw material prices. The Ministry added that the current round of commodity price increases will impact manufacturing, but is overall controllable.

Exxon Mobil (XOM) executive proposed a US-backed carbon capture and storage project for Gulf Coast refineries and industrial plants which would require a minimum of USD 100bln in public and private funding. (Newswires)

Brazil's Vale reported Q1 iron ore output 68.0mln vs exp. 72.0mln tons, nickel output at 48.5k tons and it expects 2021 copper output at the lower end of guidance. (Newswires)